If you are importing goods into Europe then get to know CBAM
CBAM, or Carbon Border Adjustment Mechanism, is now in effect and is part of the EU Green Deal which aims to reduce global greenhouse gas emissions (GHG’s) by 55% by 2030. It is the EU’s tool to put a fair price on the carbon emitted during the production of carbon-intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.
As we move through the transitional phase that runs between October 1st 2023 to December 31st 2025, any business that is importing goods from outside of the EU (apart from Switzerland, Lichtenstein, Norway and Iceland) that produces, or supplies carbon-intensive goods shown below (including some downstream products) will be required to produce a declaration and pay a duty when importing them into the EU under the new CBAM regulations.
When CBAM is in full effect there will be a requirement to purchase and surrender a CBAM certificate for emissions for the preceding year and submit an annual CBAM declaration.
The UK will also introduce CBAM in January 2027 and other countries such as Australia, Canada, Japan and South Korea are in the process of developing their own CBAM.
It is a hugely complex topic and we will unpack some of the areas of concern for you here.
Will I need to submit a CBAM report?
If you are the importer of any of the products listed into the EU (identified by the EORI number) you will be the CBAM declarant and you will need to submit a quarterly report to the CBAM Transitional Registry. The first CBAM report for Q4 2023 was due in January 2024.
However, if you are an importer that is represented by a broker or an agent more formally known as a Registered Customs Representative (RCR) – all CBAM obligations become the RCR’s responsibility.
The key thing to remember is that it is the duty of the importer or RCR to ensure the quarterly reports are submitted. As we move from the transitional phase into the definitive phase in January 2026, the reports will only be submitted on an annual basis, and the consequence of not providing them will lead to fines.
If you import products from multiple locations, that fall under the CBAM regulations, you will need to request the required embedded emissions data from all of your suppliers.
If you are the producer of any of the listed goods where they are imported into the EU, you will be asked to provide information that helps your customers report on their carbon emissions.
The information required in the report will be:
- Data identifying the authorised CBAM declarant; name and account number
- Data on imported goods: quantities (in tonnes) and type of imported goods, country of origin and production facility.
- Emissions from the production of these goods
- CO2 prices already paid in the country of origin
If you’re not sure if your goods are affected by CBAM this handy HS code checker can help.
If your goods originate in the EU you will not be required to report CBAM.
CBAM Reporting from 1st January 2026
When CBAM enters the definitive phase from 1 January 2026 there will be further requirements. All goods from the list can only be imported into the EU by an ‘authorised CBAM declarant’, who must apply for authorisation via a centralised CBAM registry. They will have to purchase CBAM certificates to pay the tax.
What will it cost me?
As we are in the early stages of CBAM where there is still a lack of clarity around the costs, with confusion around the purchase of certificates and how this will be calculated, as well as who will be liable.
In the transitional phase the three main areas of cost will be:
- Getting started with the process of reporting CBAM; ensuring there is a mechanism in place to gather the information from suppliers and producers and ensuring they are ready to provide the complex details of embedded emissions reporting.
- If you are represented by a customs broker or agent (RCR) they will be gathering this information on your behalf to prepare the report back to the EU, this will incur fees as the process is complex.
- The quarterly report contains information including the imported quantity of CBAM goods, the direct and indirect emissions embedded in the imports (calculated in line with permitted CBAM methodologies), as well as any carbon price due in the country of production.
From 1st January 2026, the declarant must have purchased CBAM certificates covering the value of at least 80% of the emissions embedded in its goods in that quarter. CBAM certificates cost are based on the weekly average of the EU ETS allowance price, currently around 80 Euros per tonne of GHGs emitted.
What are the key actions I need to take?
CBAM, as it is today, is only the beginning of what will be a long and complex process. Today there is still a lack of clarity on how it will evolve.
In addition, the EU will not be the only customs region implementing a levy for carbon emissions or carbon leakage. Our advice? Get ready now with the following actions:
- Review your current imports to see which will be impacted by CBAM.
- If you’re a supplier with EU-bound products, what are your reporting obligations? Can you report on them?
- Take a look at the customs classification and country of origin of your imports, particularly in iron, steel and aluminum sectors. Can you report on these products or installations to meet the quarterly requirements?
- Start to understand the potential future cost of CBAM on your products
- Ensure the import of CBAM products will not be disrupted
- Start to think about the wider decarbonisation strategies to minimise these costs.
Our in-house customs team are working closely with our customs partners to stay ahead of the developments from the EU and our Sustainable Freight Network is uncovering more around the topic of reporting and decarbonisation.
If you would like to talk to us further about CBAM or any other customs issues please get in touch, we are here to help.
